First, sorry about the weird bullet format, but I think I get an A for effort.
It seems that the Sunday PM EST GAPs are a common subject for discussion around the Retail Spot Currency traders watercooler, so I though I might take a moment to elucidate on this subject.
The first thing to remember about Spot is there is no central exchange, and as such, there is no central quote source. The quotes that Retail traders see are generated from a homogenized composite that, depending on the "Broker", consists of the following.
___A. Client accounts
_____1. Individual, Block, Poa
___B. Internal Prop
_____1. Alternative Investments run by the "Broker"
___C. Internal Inventory
_____1. Inventory of Units kept on hand
_______a. These are units of pairs kept on hand to "fill in" SOE
_________1. Just in case there are no takers at a certain size and price, this "inventory" fills in
______(you guys really didn't think that your 1 Mini lot was executed by RBS did you?)
Prime broker feed
__A. This feed consists of at least one PB. 2 important things to remember about PBs
____1. PBs do not, "in general", interact with retail traders below 40k units
____2. The PBs take liquidity in the case of longs and provide liquidity in the case of shorts
______a. In other words the PBs do not actually "trade" per se on the Broker/Dealers Hub, all they are doing is being a counter party to specifically sized trades
Data Provider feeds
__A. This would include Bloomberg, Reuters, Et AL.
____1. Since these feeds are "composites" of composites, they exist and provide quotes from outside the Broker/Dealer Hub.
______a. These quote services run 24/7.
______b. These quote services also may have execution platforms built in for 24/7 trading
So how does all this fit together, and how does it effect these "GAPS".
Well think of this, you might have MB Trading as your broker, now my understanding is that they shut off the servers at 5:00 PM EST Fri. and restart Sun at 6:00 PM est. Now, MBT may have shut down their servers, but the PBs and quote services are still running, so when MBT fires up the servers on Sunday the first data that shows may not be the last quote from Friday, it could be most current quote for the weekend. This makes it very clear as to why OANDA does not show "GAPS", their servers run 24/7 so if there are trades made, the price moves just like it does during the week. (Capiche Talon D?) :57:
So to recap, if your "HUB" shuts down for the weekend, you will see gaps from time to time at the "open", however if your "HUB" does not shut down for the weekend you will see the regular movement that you see during the week.
Now some will ask "what the heck were these people doing on the weekend and why were they doing it? Well there are reasons that have very little to do with what we consider "trading", here are some examples.
A Broker may need inventory for the coming week of retail trading
Two parties who execute size may have made an agreement to Buy/Sell at a specific price, and they want to execute this without any possible interference from others who may be on their Hub.
A broker may be getting rid of excess inventory, or possibly odd lots.
Now finally we come to the trading part, there may be some who would like to position themselves before Monday, maybe late Friday or Saturday afternoon.
Now here is the interesting part, some Guru somewhere will see these Gaps and claim that there is a deep meaning to them and you can tell where the "Smart" money is by what the gap looks like and what happens afterward, some even say that Fridays close would somehow be indicated by Sundays gap.
In my case, before I would believe this and start risking one cent, I would want to see statistics backed up by a live trading blotter. Gurus are very good at taking random events and wrapping them in mysticism and a Guru vocabulary, something like this.
"On this gap open we see a bull trap set by bears trying to eat raccoons in the upward secondary tick pattern that is divergent to our Proprietary order flow indicator. You can see the x rated exhaustion level by which all of the sheep will be pulled in and sheared by the smart money". Huh, what, Dude. Chris from XYZ broker was just clearing out some odd lots.
Anyway Nuff Said on this.
The Ever Saying Nuff Said VIPER